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Pension Costs Pose Challenge for School Districts

While students probably aren’t even thinking about this year’s final exams, school district business managers are busy crunching numbers for the next school year.

And the numbers are adding up to substantially higher pension costs for all Alle-Kiski Valley districts.

Fourteen area districts will combine to spend about $19.5 million for their share of employee pensions in the 2013-14 school year, according to preliminary figures provided by the districts.

The Plum School District did not respond to repeated requests for information.

Next school year’s local cost is looking to be about 44 percent more than the $13.6 million the 14 districts are expecting to spend this school year.

And it’s 138 percent more than the $8.2 million they spent in 2010-11.

The districts’ costs come after state reimbursement is factored. The state reimburses school districts at least half of their total costs; poorer districts get more, up to 70 percent.

“The increases are very unusual but not unanticipated,” said Douglas McCausland, business manager at Fox Chapel Area and a Deer Lakes school board member. “Everyone’s been struggling with how you’re able to fund those large increases along with the other increases we face in public education.”

Staggering increase

The increase comes from an increase in the employer contribution rate for the Public School Employees’ Retirement System, or PSERS.

For 2013-14, the PSERS board of trustees set the rate at 16.93 percent of payroll. That’s a 37 percent increase from this year’s 12.36 percent rate.

Area districts are predicting after-reimbursement increases of between 32 percent at Kiski Area and Deer Lakes and 68 percent at Armstrong.

Leechburg Area is predicting a 45 percent increase, which board member Jean Stull called “a little scary.

“I think we have planned very well to be able to face those rising costs head-on,” she said. “It looks like the state is going to be allocating more money to education this year. I think that’s going to help out a lot.”

Gov. Tom Corbett in his budget address on Tuesday proposed changes to reduce the pension burden. For now, retirement costs are forecast to continue to rise for the next decade and beyond.

‘Payments are due’

Click here to read the full article by Brian C. Rittmeyer (of The Valley News-Dispatch) published in the Chicago Tribune(February 10, 2013).